The head of Air Peace airline warned on Sunday that President Bola Tinubu’s recent tax reforms would trigger a dramatic surge in airfares and could force local carriers out of operation within three months, urging an immediate reversal to avert a sector-wide crisis.
Allen Onyema, speaking on Arise TV, criticized the reintroduction of customs duties and value-added tax (VAT) on aircraft imports, spare parts, engines, and ticket fares, which had been waived under a 2020 law to ease burdens on the industry.
He argued that airlines are already strained by multiple levies and charges, with passengers’ fares largely consumed by statutory deductions, leaving operators with minimal profits.
“The Nigerian airlines are heavily overburdened by taxes, levies, and all manner of charges. Just take a ticket of about N350,000. What comes to the airlines is about N81,000,” Onyema said.
“And people, everybody’s talking about the airlines as if they’re making a kill. It’s not true. We are suffering multiple taxations, multiple charges. For example, the NCA, 5% for every ticket, Mandatorily. That is to NCA alone. There are so many other charges,” he added, referring to the Nigerian Civil Aviation Authority.
Onyema explained that the new measures impose a 7.5 percent VAT on aircraft valued at $80 million, alongside similar taxes on spare parts and fares, compounded by bank loan interest rates of 30 to 35 percent.
“Now, the tax law of 2020 removed customs duties on imported aircraft and imported aircraft spares and engines, removed VAT on imported aircraft and other spare parts, and removed VAT on ticket fares. That is the 2020 act. Even then, airlines are still suffering from so many other multiple charges all over the country. Now, the new tax law has brought those things back. All of them,” he stated.
“There’s VAT now on the importation of aircraft. So if you buy an aircraft for $80 million, you are supposed to pay 7.5% of $80 million. Funds borrowed from the bank are 30 to 35%. So you bring in spare parts, you pay 7.5% on your spare parts. Ticket fares will hit $1.7 million soon. At 35% we are choking. You don’t do that. With 7.5% on ticket fares, ticket fares will hit $1.7 million soon,” Onyema warned.
“If we implement that tax reform, Nigerian airlines will go down in three months. At the end of the day, economy class tickets will go to about N1.7 billion if it happens,” he added.
The Airline Operators of Nigeria has raised these issues with the federal government, the National Assembly, and the tax reform committee, according to Onyema, who stressed that depicting airlines as profiteers ignores the harsh realities of excessive taxation in the sector.
No immediate response from the presidency or tax authorities was available.
